There are generally five key players in the supermarket industry- Tesco, Asda, Sainbury, Safeway and Morrisons (ChinaCCM). As a result, the superstore industry in britain could be described as a great Oligopoly Marketplace. Oligopolies rest between the explanations of best competition and pure monopoly. Firstly, there are several sellers yet only a few big companies who have a big market share in the market. In the UK, the five big supermarkets totally have 3/4th of the market share (123help myself! com). Subsequently, barriers to entry inside the supermarket sector in the UK happen to be high. Because the big companies have a fantastic economic of scale in this area and sell goods in a affordable, hence they are really competitive. Tesco is always before all, Asda has been planning to close the gap, and Morrisons is definitely struggling with the acquisition of Safeway. Finally, the firms on the market are interdependent (Bized, a). The Kinked Demand Curve (Peoi) because figure several above is principally made of two segments. The queue on the up is highly elastic which will arise when the firm is shedding its market share; the lower one is inelastic, this means no firm can gain more business. Oligopoly market, which can be known as advantages for customers because of its similar and steady prices, the products are highly differentiation as well. Besides, there is a primary disadvantage which is caused by the collusion. Determine 1: UK Market Share (Single Marketing Ltd, 2009)
Sainsbury: 30. 6%
Asda: 16. 6%
Sainsbury's: 16. 3%
Morrison's: 14. 1%
Summerfield: 5. 4%
Waitrose: three or more. 7%
Iceland: 1 . 8%
Figure a couple of: Supermarket Talk about (TNS, 2008)
Figure three or more: Oligopoly kinked demand (Peoi, 2002)
There are a few advantages for buyers to buy in an oligopoly supermarket. The price is always similar between firms, grocery stores will not alter price often, as well as homogenous products to get.
Firstly, supermarkets have to sell price in similar prices or even the same price. Considering that the firms are...